Part XII. Undistributed Income

If you checked Item D2 in the Heading section on page 1, don't fill in this part.

If the organization is a private operating foundation for any of the years shown in Part XII, don't complete the portions of Part XII that apply to those years. If there are excess qualifying distributions for any tax year, don't carry them over to a year in which the organization is a private operating foundation or to any later year. For example, if a foundation made excess qualifying distributions in 2023 and became a private operating foundation in 2025, the excess qualifying distributions from 2023 could be applied against the distributable amount for 2024 but not to any year after 2024.

The purpose of this part is to enable the foundation to comply with the rules for applying its qualifying distributions for the year 2025. In applying the qualifying distributions, there are three basic steps.

1. Reduce any undistributed income for 2024 (but not below zero).

2. The organization may use any part of or all remaining qualifying distributions for 2025 to satisfy elections. For example, if undistributed income remained for any year before 2024, it could be reduced to zero or, if the foundation wished, the distributions could be treated as distributions out of corpus.

3. If no elections are involved, apply remaining qualifying distributions to the 2025 distributable amount on line 4d. If the remaining qualifying distributions are greater than the 2025 distributable amount, the excess is treated as a distribution out of corpus on line 4e.

If for any reason the 2025 qualifying distributions don't reduce any 2024 undistributed income to zero, the amount not distributed is subject to a 30% tax. If the 2023 income remains undistributed at the end of 2026, it could be subject again to the 30% tax. Also, see section 4942(b) for the circumstances under which a second-tier tax could be imposed.

Excess distribution carryovers. An excess of qualifying distributions is created for a particular tax year (and available as a carryover for the 5 succeeding years) if the total qualifying distributions treated as made out of the undistributed income for the year or out of corpus with respect to the year (other than amounts distributed in satisfaction of section 170(b)(1)(F)(ii) or 4942(g)(3) or applied to a prior tax year by election) exceeds the

32 Instructions for Form 990-PF (2025)

distributable amount for the year. See Regulations section 53.4942(a)-3(e)(2). Thus, in no case does the excess for the particular tax year exceed the qualifying distributions for the year less the distributable amount for the year.

Example. X Foundation has an excess distribution carryover of $100,000 from 5 years ago that will expire to the extent that it isn't used in its current tax year. For its current tax year, X Foundation has a distributable amount of $110,000, qualifying distributions of $90,000, and no undistributed income from prior years. X Foundation doesn't elect to distribute any part of its qualifying distributions in satisfaction of section 170(b)(1)(F)(ii) or 4942(g)(3). Under these circumstances, X Foundation has no excess distributions for its current tax year. X Foundation may apply $20,000 of its $100,000 carryover from 5 years ago to its undistributed income in the current tax year, but the remaining $80,000 must expire. X Foundation can't create an excess distribution for its current tax year by electing to treat all or part of its qualifying distributions for the current year as made out of corpus and applying the $100,000 carryover from the prior year in satisfaction of its distributable amount for the current year.

Line 1. Distributable amount. Enter the distributable amount for 2025 from Part X, line 7.

Line 2. Undistributed income. Enter the distributable amount for 2024 and amounts for earlier years that remained undistributed at the beginning of the 2025 tax year.

Line 2b. Enter the amount of undistributed income for years before 2024.

Line 3. Excess distributions carryover to 2025. If the foundation has made excess distributions out of corpus in prior years, which haven't been applied in any year, enter the amount for each year. Don't enter an amount for a particular year if the organization was a private operating foundation for any later year.

Lines 3a through 3e. Enter the amount of any excess distribution made on the line for each year listed. Don't include any amount that was applied against the distributable amount of an earlier year or that was already used to meet pass-through distribution requirements. (See Line 7. Distributions out of corpus for 2025 pass-through distributions. , later.)

Line 3f. This amount can be applied in 2025.

Line 4. Qualifying distributions. Enter the total amount of qualifying distributions made in 2025 from Part XI, line 4, on the line next to column (a). The total of the amounts applied on lines 4a through 4e is equal to the qualifying distributions made in 2025.

Line 4a. The qualifying distributions for 2025 are first used to reduce any undistributed income remaining from 2024. Enter only enough of the 2025 qualifying distributions to reduce the 2024 undistributed income to zero.

Lines 4b and 4c. If there are any 2025 qualifying distributions remaining after reducing the 2024 undistributed income to zero, one or more elections can be made under Regulations section 53.4942(a)-3(d)(2) to apply all or part of the remaining qualifying distributions to any undistributed income remaining from years before 2024 or to apply to corpus.

Caution: A foundation may make a corpus election on line 4c in order to qualify under section 170(b)(1)(F)(ii) for the benefit of its contributors or in order for a foundation grantor to the foundation to obtain a qualifying distribution under section 4942(g)(3), as described in the Part XII, line 7, instructions. A foundation can't make a corpus election on line 4c in an attempt to create or increase an excess distributions carryover for the current year on line 10e by applying excess distribution carryovers to its

current-year distributable amount on line 5. See Regulations section 53.4942(a)-3(e)(2).

Elections. To make these elections, the organization must file a statement with the IRS or attach a statement, as described in the above regulations section, to Form 990-PF. An election made by filing a separate statement with the IRS must be made within the year for which the election is made. Otherwise, attach a statement to the Form 990-PF filed for the year the election was made.

Where to enter. If the organization elected to apply all or part of the remaining amount to the undistributed income remaining from years before 2024, enter the amount on line 4b.

If the organization elected to treat those qualifying distributions as a distribution out of corpus, enter the amount on line 4c.

Caution: Entering an amount on line 4b or 4c without submitting the required statement isn't considered a valid election.

Line 4d. Treat as a distribution of the distributable amount for 2025 any qualifying distributions for 2025 that remain after reducing the 2024 undistributed income to zero and after electing to treat any part of the remaining distributions as a distribution out of corpus or as a distribution of a prior year's undistributed income. Enter only enough of the remaining 2025 qualifying distributions to reduce the 2025 distributable amount to zero.

Line 4e. Any 2025 qualifying distributions remaining after reducing the 2025 distributable amount to zero should be treated as an excess distribution out of corpus. This amount may be carried over and applied to later years.

Line 5. Excess qualifying distributions carryover applied to 2025. The foundation may apply excess qualifying distribution carryovers from its 5 prior years to its current-year undistributed income, but only to the extent that the undistributed income exceeds its qualifying distributions for the year. For example, if for the tax year X Foundation has a distributable amount of $1,000, qualifying distributions of $800 that it elects to treat as made out of corpus, prior-year carryovers of $700, and no undistributed income for prior years, then it may apply only $200 of the carryovers to its current-year undistributed income. See Regulations section 53.4942(a)-3(e)(1).

Enter any excess qualifying distributions from line 3, which were applied to 2025, in both the Corpus column and the 2025 column. Apply the oldest excess qualifying distributions first. Thus, the organization will apply any excess qualifying distributions carried forward from 2020 before those from later years.

Line 6a. Add lines 3f, 4c, and 4e. Subtract line 5 from the total. Enter the net total in the Corpus column.

Line 6c. Enter only the undistributed income from 2023 and prior years for which either a notice of deficiency under section 6212(a) has been mailed for the section 4942(a) first-tier tax, or on which the first-tier tax has been assessed because the organization filed a Form 4720 for a tax year that began before 2024.

Lines 6d and 6e. These amounts are taxable under the provisions of section 4942(a), except for any part that is due solely to improper valuation of assets to which the provisions of section 4942(a)(2) are being applied (see Line 2b. Taxes on failure to distribute income , earlier). Report the taxable amount on Form 4720. If the exception applies, attach an explanation.

Line 6f. In the 2025 column, enter the amount by which line 1 is more than the total of lines 4d and 5. This is the undistributed income for 2025. The organization must distribute the amount shown by the end of its 2026 tax year so that it won't be liable for the tax on undistributed income.

Instructions for Form 990-PF (2025) 33

Line 7. Distributions out of corpus for 2025 pass-through distributions. If the foundation is the donee and receives a contribution from another private foundation, the donor foundation may treat the contribution as a qualifying distribution only if the donee foundation makes a distribution equal to the full amount of the contribution and the distribution is a qualifying distribution that is treated as a distribution of corpus. The donee foundation must, no later than the close of the first tax year after the tax year in which it receives the contributions, distribute an amount equal in value to the contributions received in the prior tax year and have no remaining undistributed income for the prior year. For example, if private Foundation X received $1,000 in tax year 2023 from Foundation Y, Foundation X would have to distribute the $1,000 as a qualifying distribution out of corpus by the end of 2024 and have no remaining undistributed income for 2024. If a private foundation receives a contribution from an individual or a corporation and the individual is seeking the 60% contribution base limit on deductions for the tax year (or the individual or corporation isn't applying the limit imposed on deductions for contributions to the foundation of capital gain property), the foundation must comply with certain distribution requirements.

By the 15th day of the 3rd month after the end of the tax year in which the foundation received the contributions, the donee foundation must distribute, as qualifying distributions out of corpus, 100% of the value as of the date of receipt of the following.

1. All contributions of cash and property received during the year, in order for the individual contributor to receive the benefit of the 60% limit on deductions under section 170(b)(1)(F)(ii).

2. All contributions of property only, in order for the individual or corporate contributor not to be subject to the section 170(e)(1) (B)(ii) limitations.

Elections. If the organization is applying excess distributions from prior years (for instance, any part of the amount in Part XII, line 3f) to satisfy the distribution requirements of section 170(b) (1)(F) or 4942(g)(3), it must make the election under Regulations section 53.4942(a)-3(c)(2) by attaching a statement in accordance with that section. Also, see Regulations section 1.170A-9(h)(2). Enter on line 7 the total distributions out of corpus made to satisfy the restrictions on amounts received from donors described, earlier.

Line 8. Outdated excess distributions carryover. Because of the 5-year carryover limitation under section 4942(i)(2), the organization must reduce any excess distributions carryover by any amounts from 2020 that weren't applied in 2025.

Line 9. Excess distributions carryover to 2026. Enter the amount by which line 6a is more than the total of lines 7 and 8. This is the amount the organization may apply to 2026 and following years. Line 9 can never be less than zero.

Line 10. Analysis of line 9. In the space provided for each year, enter the amount of excess distributions carryover from that year that hasn't been applied as of the end of the 2025 tax year. If there is an amount on the line for 2021, it must be applied by the end of the 2026 tax year since the 5-year carryover period for 2021 ends in 2026.